Lecture 1 Flashcards
economic integration
no barriers or restrictions on trade, investment or migration
disintegration
creation of barriers eg. Brexit, China war
negative integration
removes barriers
positive integration
coordinates, harmoninises government policies eg, banking regulations
advantages of integration
1) bigger markets
2) increased competition -> efficiency -> specialization
3) economies of scale
4) wider consumer choice
5) encouraged investment
disadvantages of integration
1) trade diversion
2) smaller high cost producers forced out of the market
global integration
integration across the world
regional integration
EU, NAFTA etc
WTO
global institution put in place to avoid discrimination due to too much diversity in countries integrating
IMF
international monetary fund controls the exchange rates, capital flows and loans. IT’s main aim is to reduce poverty in the world, encourage trade, promote financial stability and economic growth
advantages of IMF
1) provides loans to member nations
2) technical support and assistance - advises countries when they are attempting new economic policies
3) Fills deficit gaps- when a country has a balance of payments deficit the IMF steps in to help
Disadvantages of IMF
1) Criticized for not doing much or overreaching
2) creates moral hazard- countries can act reckless and get help from IMF
